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sattari [20]
3 years ago
7

Critical analysis Q16 Suppose that the Federal Reserve purchases a bond for $100,000 from Reggie Rich, who deposits the proceeds

in the Manufacturer’s National Bank. Initially, as a result of this bond purchase, the money supply will by. Suppose the required reserve ratio is 25%. As the result of Rich’s deposit, Manufacturer’s Bank will be able to extendin additional loans. As a result of this purchase by the Fed, the maximum increase in the quantity of checkable deposits that could result throughout the entire banking system is
Business
1 answer:
kkurt [141]3 years ago
3 0

Answer:

Explanation:

• Initially, As a result of the bond purchase, money supply will increase by $100000.

The reason for the increase in money supply by $100000 is because the federal reserve bought bond of $100000 from Riggie Rich. This is an expansionary policy which will lead to more money in supply.

• As a result of Rich's deposits, the bank will able to give $90000 more in additional loans.

The increase in the additional loans will be calculated by removing the reserve required ratio from the deposit.

= $100000 - (10% × $100000)

= $100000 - $10000

= $90000

• As a result of the purchase by the Federal reserve, the maximum increase in quantity of checkable deposits which could result throughtout the entire banking system will be $1000000.

The increase in checkable deposits will be the change in reserve multiplied by 1/RRR. This will be:

= $100000 x 1/10%

= $100000 × 1/0.1

= $100000 x 10

= $1000000

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Leas Corporation staffs a helpline to answer questions from customers. The costs of operating the helpline are variable with res
Nikolay [14]

Answer:

The average cost of operating the helpline per call at a volume of 25,300 calls in a month will be $18.10

Explanation:

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7 0
3 years ago
Anderson's Furniture Outlet has an unlevered cost of capital of 8%, a tax rate of 35%, and expected earnings before interest and
navik [9.2K]

Answer:

8.67%

Explanation:

The computation of cost of equity is shown below:-

Before capitalization the value of equity = Interest and taxes × (1 - tax rate) ÷ Cost of capital

= $1,500 × (1 - 0.35) ÷ 0.08

= $1,500 × 0.65 ÷ 0.08

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Value of firm with debt = The value of equity before capitalization + (Bonds outstanding × tax rate)

= $12,188 + ($3,500 × 0.35)

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3 years ago
Frank houser owns a football team that plays its home games at Memorial Stadium. To increase revenue he is offering a sponsorshi
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Answer:

$258,000

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The total benefits will be $108,000 + $150,000

=$258,000

3 0
3 years ago
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